United Nations, 26 September 2002 (RFE/RL) -- The director of the United Nations humanitarian program for Iraq says that a major reduction in Iraqi oil exports -- the program's funding source -- is causing difficulties in providing humanitarian relief.

The director, Benon Sevan, told the UN Security Council yesterday that up to $3.2 billion in revenues was lost between June and September because of reduced levels of oil exports.

UN spokesman Fred Eckhard told reporters that Sevan's report to the council, given in private, attributed the funding problem to Iraq's own policies and a dispute between Iraq and the Security Council committee responsible for overseeing the oil-for-food program. "Several factors have contributed to the drop in Iraqi oil exports, including Iraq's periodic unilateral suspension of exports and the continued absence of an agreement between the Iraqi government and the Security Council 661 sanctions committee on oil pricing," Eckhard said.

The council committee, prodded by the United States and Britain, has priced Iraqi oil retroactively due to reports that Iraq has been demanding surcharge payments from its buyers.

The United States and Britain suspected Iraq was using the money it gained from surcharges and other illicit oil sales to buy weapons of mass destruction. Under the retroactive pricing mechanism, oil traders have not been told what price they will pay for Iraqi oil until after they take possession of it.

Sevan's office has said the pricing disagreement between Iraq and the committee has severely hurt revenues, but his statement to the Security Council yesterday also noted a recent positive change on exports.

Sevan said there was a surge in Iraqi oil exports last week, to 1.9 million barrels per day from an average of less than 1 million barrels per day, amid reports from oil-industry publications that the Iraqi surcharges were recently lifted.

The UN's oil-for-food program was set up by the Security Council to provide revenue for the humanitarian needs of Iraqis, as well as money to maintain the country's oil industry. Iraq remains under comprehensive sanctions stemming from its 1990 invasion of Kuwait. Sanctions can only be lifted after UN monitors verify the country has eliminated its weapons of mass destruction.

Iraqi officials have blamed the sanctions for deteriorating living conditions over the past decade. Council members say Iraq's refusal to permit inspections has delayed any consideration of lifting the sanctions.

Sevan's report to the council yesterday noted improvements in some humanitarian conditions in Iraq. For example, it said the incidence of diseases such as cholera, malaria, and measles has declined. But it said waterborne diseases such as dysentery and typhoid have shown increases, attributable to the poor state of water and sanitation networks in the country.

The UN report also cites preliminary results of a survey supported by the United Nations Children's Fund, or UNICEF, showing a reduction in the rates of chronic malnutrition in children under 5. A UNICEF survey of more than 500,000 Iraqi children earlier this year found that 20 percent of them were malnourished.

In the education sector, the report by Sevan's office cites some improvements for primary and secondary schools. It says new laboratory equipment, school furniture, and teaching aids have made a positive impact.

But UN spokesman Eckhard cited mounting problems, as well. "Access to, and quality of, education have declined significantly over the past decade, with dropout rates that have increased by 5 percent over the past five years," Eckhard said.

The report says this can be blamed, in part, on the Iraqi government for neglecting the funding of the education sector. It cites, in particular, insufficient efforts to rehabilitate school buildings. A recent UN assessment found that 83 percent of primary-school buildings are in a deteriorated condition, and the Ministry of Education estimates that 5,132 additional schools would be required to meet current needs.